I was wondering if it was legal and ethical to reach out to the owner or visit them at their alternate address to try to make a deal with them in advance.  

They will likely be hit with a tax bill for the amount of debt forgiven however.

Personally, I like the freedom to pay off a debt as soon as possible.

Perhaps could I pay additional $ to HUD to agree to turn on the water...or is there another (legal) way to go about it?

Here are the numbers: sixplex in hickory NC Price: $160,000Gross monthly Rents: $3,050 (definite possibility to raise rents by about $25-50 each) Expenses: (50% rule for now): 1,525 NOI: 1,525Cap: 9.5%Debt service: 25% down, financing 120k @ 6% amortized over 20 years, with a 10 year balloon. $860/month Net monthly profit: $665Cash on Cash: 19.95%Any thoughts on this deal?

We have no debt on any of our investments, no outside funding or loans of any kind have been used.

If you provide tenant placement services without being licensed then you're exposing yourself to legal liability.

His "renter" is 3 months behind on his payments and can legally be foreclosed on in my state.

@Daniel DietzYour analysis is in the right direction, but not quite there.1) Determine the debt financing ratio - in this case .602) 60% of the gross income is then looked at by UDFI3) 60% of all deductible expenses are applied, so 60% of straight-line depreciation, 60% of the interest on the note, 60% of property taxes, etc.4) $1000 exemption applies5) The net amount after deductions and exemptions is then taxable to the IRA, and the trust tax table is used to determine the tax amount.Even if you have a negative UDFI liability, it can be worth filing the 990-T in case you can carry that loss forward to future years.We have a UDFI calculator on our website and if you PM me, I can send a link to you (BP does not want me posting that outside content on their forums).

Purchasing the property at HOA foreclosure auction makes you the legal title holder, and you then have a legal right to satisfy the senior lien.